Newly legal pot to be delayed weeks, if not months, in Boulder County

Could be March or April before retail shops open in Boulder

Dylan Donaldson, owner of the Karing Kind dispensary in unincorporated Boulder County, arranges jars of medical marijuana on Dec. 20. The business, a mile north of the intersection of U.S. 36 and Broadway, could be the first in the county to offer retail marijuana sales possibly by the end of January. (Mark Leffingwell / Daily Camera)

Marijuana opens for business in Colorado on Jan. 1 -- but not in Boulder County.

More than a hundred state licenses for retail marijuana stores have been issued in Denver, but just one in all of Boulder County. Marijuana businesses also need local approval, and a web of regulations means even that business -- The Canary's Song in Nederland -- won't be able to sell pot to the general public until late January at the earliest.

In Denver, 14 pot shops so far have received the local approval needed to open Jan. 1.

Yet in seemingly weed-friendly Boulder, recreational marijuana won't be available for sale until late February at the earliest and more likely March or April, regulators, store owners and industry experts said.

Pot in Boulder County

On Jan. 1, retail marijuana sales begin in Colorado. But not in Boulder County and Broomfield, where regulations are initially slowing or prohibiting recreational sales. Here's how the counties break down:

Boulder: Strict regulations mean it will be late February at the earliest and more likely March or April before retail pot shops can open.

Boulder County: With more lax rules than in the city, the first retail pot shop anywhere in Boulder County could be operating by late January.

Broomfield: Moratorium in place through the end of 2014, with voters deciding in November whether to make the ban permanent.

Erie: Moratorium in place through the end of 2014.

Lafayette: Moratorium in place through March.

Longmont: Recreational marijuana businesses are banned.

Louisville: The city will allow its two medical marijuana dispensaries to convert to retail sales, but their applications won't be considered until late January.

Nederland: A local dispensary snagged one of the state's first retail pot licenses, but its recreational business can't open before late January.

Superior: All marijuana businesses are banned.

That's because Boulder won't start taking license applications until Jan. 2, and the state won't accept applications from businesses in jurisdictions that aren't currently accepting applications.

Furthermore, under the city's rules, Boulder businesses that want to "co-locate" and operate recreational and medical businesses under the same roof won't be able to submit applications to the city until Jan. 21 -- and they'll have to build extensive physical separations, including different entrances, for the two sides of their operation.

That only-in-Boulder process will require owners to pull building permits and go through inspections. The state and other Boulder County jurisdictions instead are allowing "virtual separation," provided no customer under 21 are allowed in the store.

If the co-location also involves expanding the business' footprint, those owners can't apply for licenses until Feb. 3.

Boulder attorney Jeff Gard, who represents many marijuana business owners, said Boulder businesses are at a disadvantage, both because of the longer wait to start the process and the extra expense of building new walls and doors. Boulder's requirement for physical separation applies even in the businesses' off-site grow operations.

"They've left our businesses at a real competitive disadvantage because Denver businesses can co-locate without any changes and hit all the markets and change their grows around as they need to," Gard said. "Nothing changes for them except that they are now open to business for everyone 21 and over, while we're still over at the permit office."

Industry observers expect widespread shortages and long waits for the first few months that retail marijuana sales are legal in Colorado.

Growers will have to ramp up production from a market that consisted of some 100,000 medical-marijuana cardholders to one that could consist of every Colorado resident aged 21 and older, as well an undetermined number of tourists.

Retailers are moving cautiously to see how many people stay in the medical market, where they can avoid paying state sales taxes of 10 percent and excise taxes of 15 percent. In Boulder, consumers will pay an additional local sales tax of 3.5 percent and a local excise tax of 5 percent.

Excise taxes are not charged at the register, but collected on various stages of marijuana production. However, they will increase the price of marijuana. Pot shop owners estimate that a $100 medical marijuana purchase will cost a recreational customer $130

Gard said marijuana business owners are making difficult calculations. Boulder's process makes it easiest to go for full conversion, but as long as medical marijuana is still around, retail shops may have to cut prices to stay competitive and eat into their profit margins.

Those who opt for full conversion in Boulder also need to get the state and city processes to line up, because they have only 15 days to convert their existing marijuana supply from medical to recreational after they get a state license. If that time period elapses without also obtaining a city license, those businesses won't be able to operate at all.

Benefits of co-location

Co-location involves a more complicated process, but it also allows business owners more flexibility to serve both markets.

Evan Anderson of Boulder's 14er Holistics, 2897 Mapleton Ave., said different strains are popular with medical users who want relief from particular symptoms, but don't necessarily want to feel high. Co-location will allow him to continue to serve his medical customers while reaching out to a new market.

Know the law

Some key guidelines to remember about Colorado's new recreational marijuana rules:

"This gives us a chance to legitimize a much larger piece of the marijuana market," he said. "To ignore that market is not wise. There are people that legitimately need the medical part. There is going to be significant taxation that is passed through to the recreational consumer, but that doesn't mean there isn't still significant medical need. We're going to be there for both markets."

Anderson said his current layout makes co-location easier than for many other dispensaries, but he's still looking at tens of thousands of dollars in renovations and bringing the building up to date with codes that have changed since 2009.

"I hope the city realizes that doing this quickly is very important because we have the potential to be a much larger tax base than we are now," he said.

City officials had hoped Boulder businesses could start the state application process in November, when the City Council approved its retail marijuana regulations, and that businesses that had no change in ownership could open to the public after a brief meeting to review paperwork on Jan. 2.

But Julie Postlethwait, spokeswoman for the Colorado Department of Revenue's Marijuana Enforcement Division, said state law does not allow the division to accept license applications from jurisdictions that are not themselves accepting applications.

And while the Department of Revenue must act within 90 days, it cannot act any sooner than 45 days from receiving an application, according to state law.

That means it will be late February or early March before even the most prepared Boulder businesses can start selling recreational marijuana. As of Friday, just one Boulder dispensary -- The Dandelion, 845 Walnut St. -- had scheduled a Jan. 2 meeting with city licensing officials.

'Not a good snapshot'

As of mid-December, the state had received just one application from a Boulder County business, The Canary's Song in Nederland. That dispensary was one of 136 issued state retail marijuana licenses this past week.

The Nederland Board of Trustees has a hearing scheduled Jan. 21 on the businesses' recreational license request. Owners of The Canary's Song did not respond to interview requests.

Louisville adopted an ordinance in December that will allow its two medical marijuana dispensaries to convert to retail sales, but the local licensing authority there also won't meet until late January to consider those applications.

"This first month is not going to be a good snapshot for what the marijuana industry is going to look like," Postlethwait said.

Shawn Coleman, a Boulder-based lobbyist for the marijuana industry, said state and local regulators should be concerned about the industry getting off to a good start.

"Take away that we're talking about marijuana," he said. "What we don't want is headlines about how Colorado's industry doesn't have supply, that there's famine. That's not good marketing, long-term, when our competitor is Seattle."

Coleman said Boulder voters overwhelmingly supported Amendment 64 and want to see marijuana available for sale. If it gets to be March and stores still haven't completed the process, he hopes the City Council will act to expedite the process.

First in Boulder County?

For Boulder residents who don't want to drive far to buy legal marijuana, the most likely contender for Boulder County's first retail pot shop is Karing Kind, a dispensary located a mile north of the intersection of U.S. 36 and Broadway in the unincorporated county.

Owner Dylan Donaldson faces a relatively simple conversion process through Boulder County, and he doesn't have to build a physical separation between his medical and recreational businesses.

Donaldson said his interview with state regulators was scheduled for the end of December, and he hopes to open to the general public by late January or early February.

"I'm pretty excited about this new market," he said. "The medical process, the paperwork, the doctor visits, all these things hinder the ability of people who need the product to get the product. I think people will feel a lot more comfortable buying it, and it will be a lot easier for the people who really need it as medicine to get it.

"The new model will make it easier not only for people who need the product, but for us to meet the demand."

If he can open before any city businesses, Donaldson said he hopes people will make the drive to try his product -- but he's mostly focused on running the best business he can and hoping that's enough to bring customers back.

Sticking with medical

Not all Boulder dispensaries are jumping on the recreational bandwagon.

Dave Threlfall, owner of Trill Alternatives, at 1537 Pearl St., said he decided to stick with the medical model, at least for now.

"The biggest decision was made from our customers, from wanting to make sure everything is going to stay the same," he said. "People dealing with cancer, dealing with ALS, the last thing they want is extra stress in their lives. We want to make sure our customers get the same service and aren't deluged with tourists asking a million questions."

With his location just off the Pearl Street Mall, Threlfall said interested people without medical cards frequently come into the store, wondering if they can buy marijuana. It was a "tough decision" to not convert, but Threlfall said he also wants to see how the market shakes out.

With taxes on recreational marijuana so high, he suspects current cardholders will stay in the medical system, where they just pay normal sales tax. Trill already facilitates doctors' visits to make renewals as easy as possible.

Threlfall also wasn't sure he was prepared to expand quickly enough to meet the recreational demand. He hasn't ruled out opening another location focused on the retail market at some point in the future.

"Being the first one could be great, but if you're not set up for it ...," he said, letting his sentence trail off.

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